Short Term Investments: Are you making small deposits.. Are you taking precautions?.. What do the experts say..


Considering the current rising interest rates.. investors should be very careful in their choices. Especially when going for ‘short term investments’ from one to five years one should choose the right schemes carefully. Only then can they get guaranteed income without losing their hard-earned money. Before choosing investment schemes.. every prospective investor should consider their overall needs. One should decide their financial goals.. Long term projects will give good returns. But short-term investments provide a return on cash when needed. So, it is very important to choose only safe short term investments.

Liquid funds can be chosen as a short-term investment as they work effectively as contingency funds. They offer slightly better returns compared to savings deposits in bank accounts. Liquid funds are considered safe investments. They can be withdrawn anytime from the date of investment. By doing this, you can get four to seven percent interest over tax.

The tenure of liquid funds ranges from one to 90 days. What is more remarkable is that the net asset value (NAV) of liquid funds remains constant. Decreases only in rare circumstances. Another investor-friendly feature is that the money is credited to our accounts within two to three days of selling these investment units.

Then, there are ‘Ultra Short Duration Funds’. It can be invested for three to six months. These ultra short funds provide loans to companies. Due to this, compared to liquid funds, these ultra short funds carry a small risk factor. However, ultra short investments can give equal or slightly higher returns as compared to fixed deposits in banks.

Those aiming for slightly higher returns by investing in equities and futures can opt for ‘arbitrage funds’. By doing this you can get about eight to nine percent annual income. The same rules governing equity funds also apply to the profits generated by these funds.

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